[South Korean and US Automobile Industries]

by

Acknowledgement

I would take this opportunity to thank my research supervisor, family and friends for their support and guidance without which this research would not have been possible.

DECLARATION

I [type your full first names and surname here], declare that the contents of this dissertation/thesis represent my own unaided work, and that the dissertation/thesis has not previously been submitted for academic examination towards any qualification. Furthermore, it represents my own opinions and not necessarily those of the University.

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Abstract

In this study we try to explore the concept of “automobile industries” in a holistic context. The main focus of the research is on “automobiles” and its relation with “US and South Korea”. The research also analyzes many aspects of “automobile industries” and tries to gauge its effect on “USA and South Korea”. Finally the research describes various factors which are responsible for “FTA” and tries to describe the overall effect of “automobile industries” on both the countries.

Table of Contents

ACKNOWLEDGEMENTII

DECLARATIONIII

ABSTRACTIV

CHAPTER 1: INTRODUCTION1

Background1

Aim of the research3

Research Questions3

Significance of the Research3

CHAPTER 2: LITERATURE REVIEW4

Overview4

Development Process4

Restructuring of Korea's Automobile Industry5

Trade performance6

Quality Control6

What is FTA?7

The United States-South Korea Free Trade Agreement7

CHAPTER 3: METHODOLOGY9

Research Methodology9

Participants10

REFERENCES11

Chapter 1: Introduction

Background

South Korea

Starting from knocked-down assembly production in the 1960s, the Korean automotive industry has grown to be the world s sixth largest auto-producing country with 5.1 million units produced in 2010. Korea's automotive industry is considered one of the growth-engine industries h in their significant role played in the national economy. Along with the growth of automobile manufacturers, Korea's automobile parts industry has grown as subcontractors to domestic automobile companies. The existence of automobile companies affords small and medium sized automobile parts companies, whether they are first or lower tier subcontractors, the leverage to secure home market for growth. The growth of domestic automobile market had been saturated since the early 1990s when domestic demand for automobile did no longer grow as fast as the previous years. It was the automobile companies to breach the limitations of domestic market s stagnant growth by increasing exports, which greatly expanded the home market for the parts producers (Williamson, Oliver, 2004, pp 519).

The stable relationships between parts suppliers and large companies in the automobile industry began to change even before the financial crisis. The Gey-yol-hwa Law that had made parts suppliers subjected to carmakers was abrogated in 1995, and this triggered more competition between part suppliers. The policy change was a way to respond to the changes in global automobile industry. Fierce competition among automobile manufacturers in the world and the changes in the way to produce automobile and to procure parts are the basic forces behind the structural changes in the world automobile industry. Korea's automobile and parts companies have sensed the changing business environment for years. Along with market and demand conditions already in change, the financial crisis accelerated the changes and smashed the existing business relationships in automobile and parts industry. In the process of restructuring of automobile and parts industry, the existing relationships between carmakers and parts ...